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Monday, March 22, 2010

"What Does the Health Care Bill Mean to Me?" A Healthcare Bill Summary

The health care reform passed this weekend with a reconciliation vote of 220 to 211. Support for the bill was strictly party line, with 220 Democratic votes. Opposition to the bill was bipartisan, with all 178 Republicans and 33 Democrats opposing the bill's passage. (source: House Clerk)

In response to the passage of H.R. 4872, the "Health Care and Education Affordability Reconciliation Act of 2010," (full text here) the Internet is abuzz with questions like "What does the health care bill mean to me?" which is a trending topic on Google, along with "new health care bill pros and cons," "healthcare bill summary," and "obama health care plan explained."

Oh now you're interested? You couldn't have bothered to search for these questions before the bill passed, and determine your opinion in time to make a difference in its passage? Hmm? Okay. Whatever. At least you're paying attention now.

Let's break it down:

What does the health care bill mean to me?

Price Fixing: the Democrats' health care plan adds all kinds of Federal price and quantity controls to a health care market that is already rife with price and quantity distortions. Indeed, the main problem with health care is the myriad price distortions that inflate costs and quantity distortions that restrict access. So what does that mean to you? That the new health care bill takes your existing problems with the health care industry and only makes them worse. Even one of President Obama's own economic advisers acknowledges what most economists believe: "Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time."

Rationing: Yes- you better believe it! The truth is that rationing always occurs in any market. The basic problem of economics is that there are only limited resources to satisfy our unlimited wants. Prices are the the most rational rationing mechanism. If we dispense with those, then we have to use another- the judgment of bureaucrats and legislators backed by the force of government. Fixing prices necessarily affects quantity. Artificially forcing them down as the new health care bill attempts to do restricts quantity and creates shortages. If you don't know how to read the following micro-economic graph, here's a short primer.

Believe it or not, the new bill simply means less, not more access for you. Get ready for longer lines, worse waiting lists, and more rationed care. Search the text of the bill... the words "eligibility" or "eligible" appear 56 times. Some version of the word "qualify" appears 20 times. Contrast this with the word "privacy," which appears exactly zero times in the bill. Or "doctor," or "freedom," or "Constitution," which are all likewise absent.

More taxes: The word tax appears in the new health care bill 125 times. Even Democrats admit that this bill spends one trillion dollars of your money. One trillion! At a time when we have already spent trillions and trillions more dollars that we just don't have. What an incredibly stupid, short-sighted, irresponsible, economically suicidal thing to do to the American people! And in the middle of a recession of all times to do it! The sad thing is that the price tag will be inevitably higher as history tells us. Bills always costs more than Congress projects. Cato's Michael F. Cannon explains why the price tag for this new health care bill will really be three trillion dollars.

A longer recession: How can Americans afford a three trillion dollar hit to our economy? How does it create value for us to destroy three trillions dollars worth of productive capital by misallocating it and using it to create more distortions in an already distorted system? The poor and underprivileged who this bill is purported to help, will suffer the most under its fiscal and monetary burdens. Higher taxes to pay for this Federal power grab will hurt job growth and take even more income from working class Americans.

As the Treasury fuels this spending by issuing more bonds (i.e. taking out loans from lenders) it will continue to hog an already crowded credit market, pushing out businesses and hurting growth- again killing jobs. The Fed will then finance most of this debt, buying up Treasury bonds with printed money. As that money circulates in an already inflated monetary base, prices will go up. America's poor who already barely have enough to pay for electricity, gas, and groceries will be broken by the rise in prices of the things they need to live.

Obama had the audacity to call this the American dream.

Less Choice: Your choices will be restricted in the new health care system. The word "choice" appears only twice in the new health care bill. It still includes the individual mandate, which requires that Americans purchase health insurance or pay a Federal penalty. Can you believe that? A bill which allegedly sticks it to the health insurance companies delivers your captive dollars to them whether you want to pay for their services or not. If you choose to purchase more coverage than the Federal government thinks you need, you will also incur a penalty. If you are a small business owner with more than thirty employees, and you choose not to provide health insurance, you will also have to pay a Federal penalty.

How on earth does Nancy Pelosi have the gall then to stand in front of America and say that this bill helps disentangle health insurance from employers? How can she say it's good for small businesses when it adds just one more burden to their already over-burdened, over-taxed budgets? How can she say its good for jobs when it will destroy the jobs of every worker whose marginal profitability to the business is less than the added cost of providing them health insurance? This bill restricts America's already restricted health care choices and worsens its already staggering problems.

Moving forward

By the way, we don't just complain here at THL, we offer real, practical, non-partisan solutions that will help make life better for Americans. Read how we can strip the health insurance companies of their monopolistic power in one easy step. This is a very simple, but revolutionary solution, and it's never too late to get our Congress to make this happen.


  1. Do you trust the American government? Ask the native Americans or our seniors.

  2. As a Native American (Cherokee) I do not trust the government to do anything other than to lie, cheat aand steal. The liberals in this country are a far worse threat than any other that we currently face. Terrorsist cannot do the damage to our country that the liberals are doing with smiles on their faces.

  3. You may want to consider taking your economics class again. The demand/supply relationship only holds if the clearing prices are readily observable by all market participants and if the goods are commodities. This is clearly not the case in healthcare; providers have superior information and consumers are desperate. That’s the reason why our healthcare system has been such a great bonanza thus far. If someone is in great need of healthcare we can drain him/her of all wealth. After they have given us everything we cut service to their demise. I am pleasantly surprised how little the bill impairs of from continuing to get rich in healthcare; most of the potential damage seems to have been deflected.

  4. Hey I guess I don't need to take my economics class again after all because I agree with you whole-heartedly. The prices are so badly distorted, inflated, and hidden by layer after layer of bureaucracy, middle-men, regulation, and whatnot that the whole system is incredibly unfair and bewildering to the consumer. I propose a lot of solutions that would correct this problem. Sadly the bill that the Democrats passed does nothing to fix that problem and everything to exacerbate it.

  5. Well prices are only distorted for the patients. As a provider we know exactly what we can get. For insured patients we have the insurance contract. If the insurance company changes reimbursement rates then we run the new rates through a computer program which tells us which diagnosis are most profitable, which in turn defines what our patients get ill with. For uninsured patients we simply take everything they have. We have the greatest healthcare system in the world; there is no other place (short of Switzerland, which is kind of small) where a government would support us in making so much profit.

  6. Good article. I especially like the picture inserts. I would laugh if I weren't on the verge of tears...

    I want to own a small business some day and our government has just put up one more road block for me and other small business owners.

    It is interesting how "freedom" was never considered. According to CNN those who don't purchase a health care plan will be fined. So this wasn't about insuring those who wanted it. It was about the government imposing their will in another area of our lives. Less freedom=unconstitutional.

  7. Suzie... I do own a small business, and let me tell you providing Health Insurance under the current system is an absolute nightmare. We pay nearly double as a small business what many other companies pay.

    Counter to what this article suggests, this bill actually HELPS small businesses by giving small business tax rebates up to 35% in 2010 and 50% in 2014. The "Price Fixing" they refer to is actually only a stipulation that requires insurance companies to spend at least 80/85% of the money received from premiums on actual HEALTHCARE, instead of lining their pockets, and requires rebates be given to consumers if that isnt the case.

    It gives a 10% increase to what Primary care physicians are paid under Medicare, making that understaffed profession a little more lucrative, and has several provisions to increase funding for training programs for Primary Care physician, all of which will help to prevent the crazy waits for medical care they're trying to scare you with.

    My advice.. Go read up on the bill yourself. Don't just rely on the crib notes written by someone with an agenda...

  8. And what- may I ask- do you think my agenda is? Do you think I'm in the pay of the insurance companies? That I want you to be miserable and pay more? That I'm just a nihilist who wants to obstruct progress toward better standards of living?

    Please tell me what my agenda is, or acknowledge that it might be the same as yours- the prosperity, health, and well-being of our country. Just because we disagree, doesn't mean I have some agenda.

    I would counsel you to consider that many of the people in D.C. who crafted and supported this bill do have an agenda, and it's not the same as yours.

    Do some reading up on Dr. Howard Dean's thoughts about this legislation. He offers the thoughts that any true liberal who's paying attention should be thinking about this terrible bill.

  9. As for those small business tax rebates... those incentivize the provision of health insurance by employers. So I ask again, how does this bill accomplish the goal of insurance portability that Pelosi claims it does, and which Obama and the rest of the country agree should be a major goal of any comprehensive health reform? I contend that this bill worsens the entanglement of employers with the provision of health care and insurance. What a nightmare!

  10. Wes- I'm really concerned about what this new program will do for my boys' future. With the Baby Boomers starting to retire, we are going to see massive increases in the cost of Social Security, Medicare, Medicaid, and, now, Healthcare. I see nothing but massive taxes in our future. I don't see how anyone can believe that we can add 30 million people to the cost and somehow pay less! Either it is the fuzziest of fuzzy math or rationing is on its way. Not a good day for America, my friends!

  11. I agree whole-heartedly. But you know what else? I also really believe that things will get better because Americans are waking up to what's going on in an unprecedented way.

    Keep fighting, keep spreading the message, keep pushing through liberty-minded candidates and libertarian policies, but don't stay up at night worrying. I bet your boys' future will be very bright.

  12. One of the biggest problems in health care is the fact that supply is artificially low because of overregulation on both the state and federal level.

    With this bill, the Feds are attempting to fix a problem causes by overregulation with more regulation.

    It's just nonsense.

  13. This is a government grab of money- plain and simple it's a damn tax.

  14. Thank you for spreading the word and hopefully opening blind eyes!

  15. C.S. is right. Obama has just limited our options and limited competition. There needs to be more comepetition-allowing people to buy insurance across state lines and allowing the portability of bringing your insurance wherever you move. Plus, we need to figure out exactly how much each procedure costs and pay a small percentage above that, instead of these inflated prices.

  16. I am amazed at how this bill worsens, rather than fixes the problem of portability!

  17. I know nothing about the health care bill. What I do know is that if the democrats and republician parties would work together this world would be a better place to live in. It seems to me that the Republician party is against President Obama no matter what he does. Is it because he is black or what? No I am not black I am a white American citizen who believes that both party are responsible for what happen to the people in America. The American people need to wake up and get rid of the fat cats in congress who is not willing to make this a better place for the lower and middle class people. We need to help our neighbor who have no insurance and care about each other. There would be less crime if there was more people who care.!!!!!!!!!!!!!!!!! Someone who cares!

  18. Well, let's entertain the possibility that Mr. Obama is just a really, really terrible president, and that it's not about race or party. Isn't it possible that some people honestly just think his policies are overwhelmingly reckless and wrong? That's how I feel anyway and I'd be glad to explain why.